Dentsu Downgrades Full-Year Outlook As Struggles Continue

Dragged down by its struggling Japan operations, Dentsu reported a 1.5% organic revenue decline for the first half of the year, leading it to revise its performance guidance downward for full-year 2019.

In Japan, organic revenue fell 2.1%, mainly due to a decrease in traditional media spending in the market, as well as the absence of major sports events.

Organic revenue at Dentsu Aegis Network, the company’s international operating unit, was down 1% for the half.

The Americas operation turned in a better performance with organic growth of 2.8% in the second quarter and 1.5% for the first half. The company said Q2 improvement in the region was driven by its media brands (Carat, Vizeum and Dentsu X), iProspect and performance marketing agency Merkle.  

The company also announced a ¥30 billion ($282.5 million) share repurchase program that Dentsu president and CEO Toshihiro Yamamoto said was designed to signal the company’s “confidence in the future performance of the group.”



Earlier this year, Dentsu said shareholders endorsed plans for a company restructuring in which the parent Dentsu Group will effectively support all subsidiaries.

Currently, Dentsu in Japan and Dentsu Aegis Network are run as separate operations. The new structure is scheduled to kick in Jan. 1, 2020.

“As we continue to bring the Japanese and International business closer together, we can fuse our capabilities and increasingly leverage the diverse and talented 62,000 individuals across the Group,” Yamamoto added. “This will allow us to anticipate continuous change, drive innovation and offer world-class services to our clients.”

The company is now forecasting a 4% dip in revenue for the full year and a nearly 42% profit shortfall.



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